LNW Q1 Earnings Call: Tariff Mitigation, Product Pipeline, and Margin Focus Shape 2025 Outlook

Gaming products and services provider Light & Wonder (NASDAQ:LNW) missed Wall Street’s revenue expectations in Q1 CY2025 as sales rose 2.4% year on year to $774 million. Its non-GAAP profit of $0.94 per share was 16.7% below analysts’ consensus estimates.

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StockStory’s Take

Light & Wonder’s first quarter results were shaped by operational progress in its core gaming, SciPlay, and iGaming business segments, with management emphasizing the performance of new game franchises and continued expansion of its North American installed base. CEO Matt Wilson highlighted gains in market share—particularly in premium and recurring revenue titles—and noted the company’s ability to add over 500 gaming units sequentially. Despite cycling over tough international comparables and weather-related headwinds in the U.S., the company maintained stable operating margins. Wilson also pointed to ongoing strength in SciPlay’s Quick Hit Slots and 88 Fortunes, and described the company’s focus on content diversity as a key lever supporting growth across all business lines.

Looking forward, Light & Wonder’s executive team reiterated their commitment to operational discipline and margin expansion, even amid macroeconomic uncertainty and evolving tariff policies. Management expects growth to accelerate in the second half of the year, supported by a robust product pipeline, integration of Grover Gaming’s charitable assets, and expanded direct-to-consumer (DTC) initiatives in SciPlay. CFO Oliver Chow stated, “We have line of sight to top-line growth to get us to the $1.4 billion target,” citing ongoing cost optimization, supply chain adaptation, and further investments in first-party content. Wilson added that resilience in gross gaming revenue (GGR) across U.S. markets and upcoming platform efficiencies will be critical signposts for achieving the company’s full-year objectives.

Key Insights from Management’s Remarks

Management attributed Q1’s performance to successful product launches, expanded DTC channels, and proactive supply chain adjustments to address tariff uncertainty, while also highlighting strategic preparations for the Grover Gaming acquisition.

• Gaming operations expansion: Light & Wonder increased its North American installed base by over 500 units sequentially, now exceeding 34,000 units, with 51% of machines classified as premium. Management noted a 400-basis-point share gain in North American game sales over the past year, underscoring momentum in both hardware and content franchises.
• SciPlay DTC momentum: The SciPlay segment sustained its outperformance versus the broader social casino market, with Quick Hit Slots and 88 Fortunes posting double-digit growth. The company’s DTC platform now accounts for over 13% of SciPlay revenue, and recent regulatory changes around alternative payment methods are expected to further increase DTC penetration and margins.
• iGaming content launches: Light & Wonder reported ongoing success with new first-party games and exclusive partnerships, such as the launch of Huff and More Puff with FanDuel and Wizard of Oz Over the Rainbow with BetMGM. These titles set single-game records and are expected to drive broader market expansion as exclusivity periods end.
• Tariff and supply chain mitigation: Management detailed efforts to mitigate tariff impacts through supply chain reconfiguration, including inventory pull-forwards and increased sourcing via Mexico. They emphasized that current inventory will remain tariff-unaffected for several quarters, giving the company time to adapt further.
• Grover Gaming acquisition progress: The Grover transaction remains on track, with regulatory approvals expected by the end of Q2. Management views this acquisition as a strategic entry into the regulated charitable gaming market, accelerated by Indiana’s recent legalization of electronic pull tabs, which was not included in prior forecasts.

Drivers of Future Performance

Management’s outlook is anchored in margin expansion initiatives, supply chain adaptation, and increased contribution from digital and regulated gaming channels.

• Second-half weighted growth: Management expects improved sales momentum in the latter half of the year, driven by the rebound of SciPlay’s Jackpot Party, new game launches, and anticipated contributions from the Grover Gaming acquisition. They see recurring revenue and premium product mix as key drivers of this acceleration.
• Margin optimization and cost control: The company continues to implement margin enhancement strategies, including ongoing supply chain right-shoring and operational efficiencies. These efforts are intended to offset tariff headwinds and support sustained EBITDA margin performance at or above current levels.
• Digital and platform investments: Light & Wonder is increasing investment in its DTC channel for SciPlay and advancing its Carbon platform to enable simultaneous game releases across business lines. This should improve cost efficiency and scalability as new markets, such as Indiana’s charitable gaming, come online.

Catalysts in Upcoming Quarters

In the coming quarters, our analysts will be tracking (1) the pace of DTC adoption in SciPlay and its effect on segment margins, (2) the integration and revenue contribution from the Grover Gaming acquisition, especially in newly legalized markets, and (3) the company’s ability to further optimize supply chain and operational costs to sustain margin expansion. Execution on the Carbon platform and the rollout of high-performing content across channels will also be key to monitoring progress.

Light & Wonder currently trades at a forward P/E ratio of 15.5×. In the wake of earnings, is it a buy or sell? Find out in our full research report (it’s free).

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